Casual dining brands ‘reliant on openings for growth’

A new report from CGA Peach and Barclaycard into the habits of the UK eating-out sector has warned that restaurant and pub operators face a number of “obstacles” in their path to expansion.

The report, ‘Looking for Tomorrow’s Growth’, shows that two in five adults eats out at least once a week, leaving it to conclude that growth in monthly spending in pubs and restaurants has far outstripped that in supermarkets in the last two years.

But while the frequency of eating out remains high, organic growth has been harder to come by.

CGA Peach data shows that total sales for leading managed pub and restaurant groups grew by 4.3% in the year to August—but by just 0.8% on a like for like basis.

It indicates that casual dining brands in particular have been reliant on openings for growth—and that has led to a sharp upswing in the supply of restaurants across the country.

Separate CGA Peach data shows the number of managed restaurants has increased by 5.6% in the last year, with small to medium sized groups especially active.

The report identifies more key dynamics in eating out, including a generally even distribution of new openings around the country and a particularly high concentration in cities beyond London including Manchester, Birmingham and Glasgow.

It also highlights important trends in loyalty—with only a third of adults considering themselves loyal to a particular brand, leaving two thirds who are ambivalent or fickle—and insights into the crucial segment of 18 to 34 year-old ‘millennials’, who now account for around half of all eating out visits.

The report also highlights the problem of meeting diners’ rising expectations; only three in ten customers say they are very satisfied with their experience at eating-out brands, a figure that has remained static for several years.

CGA Peach vice president, Peter Martin, said: “Eating out has become a near-universal habit for British consumers, and restaurant and pub operators have responded with incredible energy, dynamic new concepts and speedy brand roll-outs. But that has led to the twin challenges of intense competition for market share and heightened expectations among consumers. Add in developments like soaring property costs, the National Living Wage and Brexit and we start to see how tough it is out there for operators. This report reveals how they can rise to the challenges and unlock growth.”